Georgian government terminates contract with TAV

The Georgian government has terminated the memorandum with Turkish company TAV managing Tbilisi International Airport on the reconstruction of the current inactive runway which means that the right of the Turkish company to operate the airport will not be extended until the end of 2037.

In August 2012 the former government of Georgia signed a memorandum with TAV Airports Holding, which owns a 76 per cent stake in Tbilisi International Airport's operator Urban Georgia's shares, according to which the Turkish company had to invest $65 million to reconstruct one of the two runway strips which are currently out of use. In return for the planned investments of TAV Urban Georgia, an extension of the right to operate the airport for 10 years and nine months, from February 2027 to November 8, 2037 was granted.

"The government believes the extension of operating for an additional 11 years is not reasonable at this stage. The work is temporarily suspended, but will be resumed in the near future as it is a strategically important project. The second runway has to be reconstructed and the government took this upon itself, "Deputy Minister of Economy Natia Mikeladze said.

She noted that the government might try to acquire resources from international financial institutions to back the runway reconstruction.

Mikeladze stated that the Turkish company will receive compensation from the government for expenditure incurred for the second runway's reconstruction.

The Tbilisi International Airport has been operated by TAV since October 2005 and in May 2007 the company also took over the management of Batumi airport.

On January 7, Georgian President Mikheil Saakashvili criticised the suspension of the runway reconstruction at Tbilisi airport noting that as a result of this "Georgia will lose hundreds of thousands of tourists."